New RBS payoff row looms as finance chief leaves

A fresh row over rewards for failure could be looming at Royal Bank of Scotland when the departure of its finance director, Guy Whittaker, is announced later this week.

Whittaker is expected to be the latest senior executive to leave the bank, which is 70% owned by the taxpayer.

Although he has escaped much criticism over RBS's performance as he did not join the Edinburgh-based bank until 2006, Whittaker was finance director when the disastrous decision to buy Dutch bank ABN Amro was taken just as the credit crunch began to bite.

His departure could be announced as soon as Tuesday, when the stockmarket reopens after the holiday and the major high street banks begin to update the City on their trading in the first few months of the year.

Whittaker was paid £1.1m in 2008, which included a £282,000 pension allowance, and a further £368,000 from the vesting share awards granted to him when he left Citigroup to join RBS. It is not immediately clear what his payoff is likely to be, but RBS will be careful to avoid a repeat of the row that broke out over the £16.9m pension pot for the former RBS chief executive, Sir Fred Goodwin.

City analysts will be watching the industry trading updates this week for signs of whether the deterioration in the economy will cause rising bad debts.

Standard Chartered, which focuses on emerging markets, will kick off the updates on Tuesday and will be followed by Barclays on Thursday and Royal Bank of Scotland on Friday. HSBC is scheduled to provide an update next Monday and Lloyds Banking Group must also provide an update on its trading this year before the middle of May.

The mood in the stockmarket towards banking stocks has improved dramatically in six weeks. Barclays has raced from a low of almost 50p to close on Friday at 279p, while RBS and Lloyds have tripled to 44p and 109p respectively over the same period.

Fears that the banking sector will need to raise fresh capital seem to be allayed for now, following the £13bn rights issue by HSBC in March.

Barclays' chief executive, John Varley, has warned that "because these are unusual times", the bank will give a fuller than usual statement on its first quarter performance on Thursday.